Assume That There Is an Increase in Perceived Bankruptcy Risk

question 7

Multiple Choice

Assume that there is an increase in perceived bankruptcy risk.As a result of this we would expect to see

• A)income and interest rates to rise.
• B)money demand and interest rates to fall.
• C)money demand and interest rates to rise.
• D)money supply to rise and interest rates to fall.

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Definitions:

Interest Allowances

The amount of interest income received or credited to an account, sometimes used in calculating adjusted income or benefits.